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All You Need to Know About Dedicated Team Contracts

Hiring a dedicated team from an offshore location is often treated as a synonym of outsourcing in general. Traditionally, companies resorted to outsourcing to extend their own in-house IT departments, and the practice of hiring entire teams, managed or unmanaged, from an overseas vendor became very commonplace.

Dedicated teams are typically hired for a prolonged period of time to work on a project or multiple projects. Their composition can be quite diverse and typically depends on the needs of a particular project or customer. For Cortlex, dedicated team contracts form the foundation of the company’s business, which is why we thought it would be a good idea to share our observations of the nuances of offering dedicated development teams to our customers.

Advantages of hiring a dedicated team

Most companies looking to hire a team of developers do it either for cutting production costs or for securing experts in a particular discipline that are in short supply on the local market. With access to a much larger talent pool offered by top outsourcing destinations, customers gain a lot more flexibility in terms of balancing costs against skill level, availability, personal qualities, level of commitment and other relevant factors, and are able to interview as many candidates as are offered by their outsourcing partner. On top of that, customers benefit from the ability to quickly resize their teams depending on the projected workload and current business circumstances, while ensuring that none of the project knowledge gets lost. For instance, a QA automation person may take part in a project for the first couple of months and set up the testing framework, then be withdrawn for another three month and then come back again to expand test coverage when it becomes necessary. Such flexibility in allocating/hiring people, then benching/reassigning them to other projects would be a challenge in case of regular in-house staff.

Cost-wise, an offshore dedicated team is even more lucrative.

Offering rates that are just a fraction of what an employer would be paying a developer on home soil, offshore service providers take full responsibility for finding, hiring, onboarding the necessary specialists, providing them with a fully equipped workplace, paying relevant taxes and offering them an appropriate social package.

Therefore, not only do customers save on direct costs, but are also delivered of multiple indirect expenses associated with having an employee in the office.

Apart from software development and quality assurance, offshore teams are often hired to provide product support and maintenance services. Being hours away from the customer’s target market, they are able to work on previously reported technical issues and accept new support requests while the customer's in-house specialists are unavailable.

Potential difficulties in managing an offshore dedicated team

Under the dedicated team model, the contractor provides the customer with a particular resource to work exclusively on their project(s), and it is assumed that it is the customer who is solely responsible for managing the team members and tasking them to avoid idle time. Therefore, the team is billed for in full, yet at rates that are lower than the ones used for T&M and fixed-price contracts.

In spite of being obviously beneficial for the customer, lower rates and full dedication of the remote team come at a price. First and foremost, dedicated team contracts are signed for a extended period of time, typically starting from 6 months, which means that the customer must have a more or less clear vision of the roadmap and the amount of work to be completed by the team prior to signing the contract. Then comes the question of efficient management. As mentioned above, the default assumption is that the customer will be managing the team via own project/product managers or team leads. However, it is not at all uncommon for a company to be represented by not-so-technical product owners, while the technical part of project coordination is carried out by someone on the contractor’s side – for example, a dedicated Scrum Master, if Scrum is used as the primary development methodology.

Contrary to many customers’ expectations, work under a dedicated contract doesn’t come with any kind of warranty by default. This is caused by the ongoing, continuous and dynamic nature of the work being done by the team and the constantly changing requirements. However, the parties can agree on taking some time, typically at the end of the project or before a major milestone, to thoroughly re-test the product and apply bug fixes. In Scrum projects, these are stabilization sprints appended to the final development sprint to ensure consistent code quality and absence of bugs that fell through the cracks during preceding sprints.

In terms of responsibility for the outcome of the project, the dedicated team model is the exact opposite to the fixed-priced approach. By hiring a dedicated team, the customer commits to monitoring its workload and ensuring that requirements are being communicated regularly and in full. As a rule, this type of contract requires considerably more active involvement of the customer in the work of the team, frequent (daily) communications, on-site trips and generally a much higher level of interaction between the parties.

Conclusion

Dedicated offshore teams are the most efficient and expedient method of ramping up the internal development or QA capacity. They typically turn out to be cheaper and more elastic than in-house resources, but require that the customer be proactive, committed and reasonably involved with their work. The key to success in putting together a stable, motivated and performing development team lies in a transparent process, fast and efficient communications and mutual understanding of the project goals.

If you are interested in learning more about our experience in building and managing dedicated teams using the most popular methodologies, please let us know and we’ll gladly set up a call to discuss your needs.